Banks and Cell Providers Joining Forces

I’m always really leery of freebies. I always assume there’s a catch…somewhere…somehow. And so it was when I got my T-Mobile Value Visa Prepaid Card in the mail from Citibank. What are they up to?

With a balance of $25 on the card, the letter said I can use the pre-paid debit card at any retailer that takes VISA. (Does this mean I can use the card and maybe win ten Super Bowl tickets like in the TV commercials? Now that would be of interest!) I can spend the $25 at any T-Mobile store, of course or I can just go across the street to the Citibank branch and get the $25 in cash. Why don’t they just call it a gift card? I received the debit card because I added mobile broadband for my laptop so I don’t have to be limited to just mobile hot spots. It was clear from the mailing, Citibank is targeting younger consumers with this offer. Oh well.

This must be a lost leader for both T-Mobile and Citibank. T-Mobile is probably counting on people coming to their stores and spending more than the $25 face amount. I can’t imagine that T-Mobile coughed up the money. I suspect Citibank wanted access to some of T-Mobile’s customer list and offered to provide the debit cards and the corresponding $25. Even if 100,000 debit cards were issued, each valued at $25, that’s a potential cost of $2,500,000 for Citibank. A drop in the bucket for them, I’m sure. Even if only 20,000 people activate their cards, Citibank is sure to make money on its investment. People who activate, but forget to use the card will get charged a $3 monthly fee. Taking a cash advance generate additional fees. Plus the bank has tens of thousands of possible new customers for credit cards, banking and other services. Citibank will probably get that $2.5 million back before the end of the first quarter. And T-Mobile? New revenue through additional sales and, who knows, maybe the company was paid a fee by Citibank to get access to its customer list.

So, in the end, rather than being on anybody else’s mailing list, I decided not to activate the debit card and do what I always do with plastic that comes in the mail. You might want to consider doing the same. Until next time, here’s to good planning!